‘Blair, the Third Way and European Social Democracy: a …casey1/BAB-Sloam.pdf · ‘Blair, the Third Way and European Social Democracy: a new political consensus? Introduction

Dr James Sloam (Royal Holloway, University of London)

Paper Presented to "Britain After Blair" Conference, Chicago, IL, 29 August 2007

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�Blair, the Third Way and European Social Democracy:

a new political consensus?

Introduction

Tony Blair came to power in 1997 on a wave of optimism. The slogan ‘New Labour,

New Britain’ translated as a desire to reform both the party and the country. In strategic

and policy terms, these ideas were underpinned by the political philosophy of the Third

Way (Giddens, 1998; Blair, 1998), adapted from the New Democrats in the United States

(e.g. Reich, 1992; DLC/PPI, 1996). Blair’s victory in 1997 furthermore coincided with

the electoral success of centre-left parties across Europe (added to the Clinton

presidency in the US), creating what optimists saw as a new ‘social democratic moment’.

Labour’s success has been popularly portrayed as a triumph of political strategy, and the

political content of the project has been downplayed. The term ‘Third Way’ was – in turn

– ‘widely derided as vacuous’ (Fielding, 2003: 81); characterised as thinly-veiled neo-

liberalism (McKibbin, 2000; Callinicos, 2001);1 and, relativised as just one of several Third

Ways in European social democracy (Merkel, 2000). The project, in addition, appeared to

stall on the international plane, where – despite the development of intensive contacts

through progressive governance networks in the late 1990s and early 2000s (e.g. Policy

Network) – few common policies could be agreed. The term ‘Third Way’ therefore

slipped into obscurity until even proponents of the New Labour project no longer referred

to it by name.

The following paper is not: a) claiming that New Labour invented the ‘Third Way’

concept; b) seeking to defend Labour policy in government; or, c) debating whether this

approach is intrinsically social democratic. What is more, it deliberately avoids tackling

1 Callinicos (2001) argues that the Third Way is a political programme morphed onto the dominant neo-liberal international economic theory.



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areas where policy has been less consistent e.g. law and order, and foreign policy.2 In

these cases, tactical considerations, (perceived) national interests and unforeseen events

have trumped a coherent policy programme. This study also avoids discussion of the

historical associations and discursive context of the Third Way, given its belief that ‘it

was the content that mattered and not the term itself’ (Halpern and Mikosz, 1998).

Using Blair’s (1998) original Fabian pamphlet and the Blair-Schröder paper (1999) as

starting points, this paper argues that (contrary to popular belief) Labour’s Third Way has

provided a coherent political philosophy that has been enacted in government. Its central

aims of have been to promote the primacy of the economy, and to concentrate spending

priorities on social investment within the context of an active welfare state. The paper

demonstrates that the Third Way under Blair and Brown manifested itself in a consistent

approach in a number of key policy areas, and also that the resulting policy innovations

successfully shifted the centre of gravity of political debate in the UK. These ideas have

furthermore been increasingly accepted by social democratic parties across Europe.

Defining Blair�s Third Way

The Third Way movement was developed by the centre-left in the US, and then the UK,

as a response to new challenges. For the Labour Party successive defeats in the polls led

many in the party to question the relevance of their old values. This led to the revision of

the party’s policy platform, its strategy and organisational structures that took place

under the leaderships of Neil Kinnock (1983-92), John Smith (1992-94), and Tony Blair

(1994-2007) (Sassoon, 1997; Mandelson, 2002; Fielding, 2003). These changes were not

only provoked by strategic trauma, but also by a wider set of developments. Macro-level

drivers included the rapid advances in technology, related social developments that led to

the emergence of a more individualised electorate in terms of life-styles (Giddens, 1991)

and values (Inglehart, 1997), and the internationalisation of national economies and trade

(often categorised as ‘economic globalisation’). A new generation of Labour leaders,

hungry for success and reflecting on attitude shifts in society, recognised that the party

should be more pragmatic (less dogmatic) in its outlook – ends were more important than

2 Labour’s Third Way was ambiguous in its approach towards justice and home affairs and foreign policy despite promising early signs (e.g. ‘tough on crime and tough on the causes of crime’ (Blair, 1998: 14), ‘ethical foreign policy’ (Cook, 1997)).



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means. According to Blair (1998: 4): ‘a critical dimension of the Third Way is that policies

flow from values, not vice versa’. This provided the genesis of the Third Way as the

Labour Party looked for practical responses to several key strategic and policy dilemmas.

The main strategic challenge for the Labour Party was to come to terms with ‘post-

Thatcherite politics’ (Driver and Martell, 2006). The success of the Conservative Party

under Margaret Thatcher was not only a tactical problem for Labour. The impact of

Conservative policy on Britain had altered the terms of the political debate. One effect of

the Conservative reforms was the acceleration of the process of individualism and value-

change alluded to above. A second consequence was that the Conservative Party seemed

to won the political debate on a number of issues, leading to general consensus opposed

to the idea of ‘big government’ (high taxes, large bureaucracies, ‘inefficient’ nationalised

industries etc.) and resentful of tax-payers’ money being re-distributed to what were seen

as welfare ‘scroungers’ (Roy and Clarke, 2006). These shifting public attitudes hit the

Labour Party hard, tarred with the brush of high taxation, increasing public debt, and a

public sector undermined by trade union action (witnessed in its previous period in

office, 1974-79). Individualism, voter dealignment and the shrinkage of Labour’s

support-base in the blue-collar working class, further demonstrated the desperate need of

a big tent strategy that could appeal to the new centre-ground of British politics. On a

strategic level, the party’s revisionists saw the Third Way as both breaking free from the

shackles of Labour’s past and redressing the deficiencies of the Conservative government

(Blair, 1996 and 1998; Mandelson, 2002).

Political life in post-Thatcherite Britain also presented the Labour Party with two critical

policy challenges. First of all, irrespective of the electorate’s continuing suspicion of big

government, any administration had to face intense pressure on public spending resulting

from an ageing population and the increasing cost healthcare. This made it more

important than ever to improve employment rates in the UK to offset the dependency

ratio. Thus, both for strategic reasons (to demonstrate its economic competence) and

policy reasons the primacy of the economy became the raison d’être of ‘New Labour’.3

In real terms, this meant making sure that government did not get in the way of business

(and, as far as possible, implementing business-friendly policies) and committing to a

balanced budget (see below). A second key area of interest was the role of the state in the



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economy and in public services. This was a key area where new means seemed to justify

the ends. In the early 1990s, Labour was opposed to a ‘commercialised contract system’

in the NHS, rejected ‘Conservative plans to privatise British Rail’ and wished to ‘end the

de-regulation of the buses’ (Labour Party, 1992). A few years later the symbolic Clause

IV commitment to nationalisation had gone and Blair (1998: 3) could argue that ‘the

promotion of equal opportunities does not imply dull uniformity in welfare provision

and public services’. New Labour, like the New Democrats in the US, saw the

government as ‘society’s servant, not its master’ (DLC/PPI, 1996). The state was an

enabling force that ‘should not row, but steer’ (Blair and Schröder, 1999: 164).

The legacy of Thatcherism also presented the Labour Party with a major opportunity. If

the party could convince the electorate that they were committed to sound economic

management (restrained public spending and taxation), the public would support greater

investment in public services. Polls showed that voters recognised the deterioration and

under-funding of key public services (especially the National Health Service, NHS) under

the Conservative governments. Despite major programmatic revisions, the Labour Party

could demonstrate its commitment to core values – social democratic ends – by providing

public investment to enable equality of opportunity. The party could also play on the

apparent heartlessness of the Conservative approach. For Blair (1998: 1):

‘it is a third way because it moves decisively beyond an Old Left preoccupied by state

control, high taxation, and producer interests; and a New Right treating public investment,

and often the very notions of ‘society’ and collective endeavour, as evils to be undone.’

At a conceptual level, the Third Way in the UK shared the ideals of the New Democrats

in the US, as expressed in ‘The New Progressive Declaration’: ‘equality of opportunity’

(through public investment), ‘mutual responsibility’ (citizens’ duty to contribute their fair

share), and ‘self-government’ (injecting competition into public services and expanding

choice) (DLC/PPI, 1996). Unlike the Clinton Democrats, however, Labour was able to

convert much of this programme into government policy (given its large parliamentary

majority and the weakness of the Conservative Party after the mid-1990s). These ideals

manifested themselves into four concrete objectives for the Labour Party:

3 The prioritisation of the national economy did, of course, follow the New Democrat logic that ‘it’s the economy stupid!’.



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1. The primacy of the economy: a successful economy as the precondition for social justice

and public support.

As globalisation and technological change had led to a situation where the ‘ability of

national governments to fine-tune the economy in order to secure growth and jobs has

been exaggerated’ (Blair and Schröder, 1999: 162), ‘New Labour’s partnership with

business is critical to national prosperity’ (Blair, 1998: 8). The Blair-Schröder paper (1999:

166-72) set out in explicit terms the ‘new supply-side agenda for the left’ for a ‘robust

and competitive market framework’. In sum, the Third Way should promote business-

friendly policies and withdraw the state from areas where the private sector worked best.

2. Keeping public spending within ‘sustainable limits.

The Blair-Schröder paper (1999: 164, 171) argued that ‘sound public finances should be a

badge of pride for modern social democrats’, and stated unambiguously that ‘public

expenditure as a proportion of national income has more or less reached the limits of

acceptability’. For Labour, the idea of prudent public spending fitted with both the tactical

and programmatic aspirations of the party, providing the political and economic capital

for later social investment.

3. Social investment in key areas to increase equality of opportunity and social capital.

The next logical step in Third Way thinking was investment in social capital that would

ensure government resources were best utilised in both an economic and a social sense:

‘The real test for society is how effectively this expenditure is used and how much it

enables people to help themselves… The top priority must be investment in human and

social capital’ (Blair and Schröder, 1999: 161, 169). By investing in key areas like

education and health, a Labour government could enhance equality of opportunity and

alleviate poverty and social exclusion, whilst at the same time enriching the skills pool at the

disposal of the national economy.4 In this context, it was argued that the most efficient

providers of services – whether public or private – should be used.

4. An active welfare state (Giddens, 1998) where citizens have rights and

responsibilities.5

4 The object was to create a virtuous circle characterised by Gordon Brown’s interpretation of ‘post-neoclassical endogenous growth theory’. While there are a number of variants of this theory, Brown identified investment in skills and infrastructure as the key elements in his approach (Freeman, 2000). 5 Blair (1998: 4) argued that the ‘rights we enjoy reflect the duties we owe’.



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Blair (1995) criticised what he described as the ‘do your own thing’ attitude of the Old

Left that had led to a dependency culture and the ‘get what you can’ individualism of the

New Right that had resulted in social exclusion. Citizens had a right to state provision

that ensured equality of opportunity and a decent standard of living (for those who worked

or could not support themselves e.g. children and the elderly), but had the duty to

contribute to the state in return. In terms of the welfare state, Labour’s Third Way

sought ‘to transform the safety net of entitlements into a spring board for personal

responsibility’ (Blair and Schröder, 1999: 173), where the benefits system was re-ordered

around employment (‘welfare to work’).

Third Way Policy in Government

The genius behind the New Labour/ Third Way project was to marry together strategic

considerations with a coherent body of policy. The success of Labour at the polls was in

no small part due to the synergies between these two components. The rejection of the

Old Left and New Right was tactically employed to steal the centre-ground from an ailing

(and ‘uncaring’) Conservative Party, and allowed the party to reject previous Labour

policy (as out-of-touch with the modern world). In short, they promised to maintain

economic orthodoxy whilst redressing the deficiencies of Thatcherism (in particular, a

lack of investment in the country’s infrastructure/ public services). Whereas the policy

programme of the Blair governments has been studied in great detail elsewhere (e.g.

Driver and Martell, 2006; Shaw, 2007), the following section highlights the four main

areas where the Third Way policy was clearly visible.

1. Economic Performance: ‘Our first task was to deliver a platform of stability based on

low inflation and sound public finances’ (Brown, 1999: 49).

During Labour’s first term in office (1997-2001), the party followed the spending plans

of the outgoing (Conservative) Major Government. The new government, buoyed by an

upturn in the economy (healthy growth rates and falling unemployment) in fact managed

to make a significant dent in the national debt (see Figure 1). The aim of the Labour

Party was to place the economy first as a precondition for achieving greater social justice

though public investment. Chancellor Brown’s golden rule, to ‘only borrow to invest’ over

the period of the economic cycle (HM Treasury, 1999: 2) was by and large maintained.



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The second aspect to the prioritisation of economic matters was the adoption of a

business-friendly approach. Domestically, this involved cuts in the rate of corporation

tax (33p to 30p), small business tax (23p to 19p) and capital gains tax for long term

business assets (40p to 10p) (see Brown, 2006). Internationally, the Labour’s Third Way

is positive about the promotion of free trade within the global economy. Although the

room for manoeuvre is limited within the European Union (where external trade is

communitised), the UK under Blair and Brown has firmly supported the attack on public

subsidies within the EU (Internal Market) by the European Commission. New Labour’s

apparent preference for business interests has inevitably led to tensions with the party’s

traditional partners (and founders), the trade unions. But, partially satiated by the large

increases in public spending, organised labour has yet to mount a serious challenge (i.e.

by cutting funding to the Labour Party) to the Third Way’s close relations with industry.6

2. Increased spending on key public services: ‘On the basis of economic strength and

stability we are providing the resources to achieve high quality services for all’

(Blair, 2002: 11).

After coming to power in 1997, the Labour Party effected a modest growth in public

spending in their first term in key areas targeted for social investment by the Third Way

(e.g. health and education). However, these increases were not (initially) significantly

higher than the rates achieved during the Major governments (see Figure 2). For New

Labour the priority was clear: ‘tough and disciplined measures to ensure financial

prudence and economic stability first… investment only once the fruits of stability have

been achieved’ (Mandelson, 2002: xv). In 2001, by which time the economy was clearly

on a stable footing (Figure 1) and Chancellor Brown had established a reputation for

fiscal prudence – Labour had the confidence and fiscal resources to substantially increase

spending in these areas. Figure 2 shows public spending overall increasing in real terms

by an average of 4.8% per year between 2001 and 2005, whilst health spending grew by

8.2% per year, education spending by 5.4%, and transport (which was relatively neglected

during the first term) by 8.5%.7

6 The trade unions, chastened under the Thatcher governments in the 1980s, furthermore have no serious political alternative to their support for the Labour Party. 7 Boosting investment in these core services tied in with the Third Way ideal of ‘promoting equality of opportunity for all groups’ in society, and guaranteeing ‘equality of life chances’ for every child (Labour Party, 2005: 27-8, 75).



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Public sector investment was linked to public sector reform. In more detail, the first

principle of this investment programme was ‘a new deal for public service staff’ (Blair,

2002: 17). Much of the new investment was designed to deal with the perceived under-

staffing in the NHS and education sector. Tens of thousands of new doctors, nurses and

teachers were thus recruited through the provision of ‘better pay and conditions’ (Blair,

2002: 26). In return public sector workers would often have to commit to more flexible

working hours and reassessment of the effectiveness of their work. The second principle

of public sector reform was ‘national standards’ (Blair, 2002: 17). Increased public

spending was accompanied by numerous performance targets used to assess the success

of this investment relating to, for example, the length of hospital waiting lists, pass rates

for school exams, and the size of school classes.

Added to quantitative increases in spending were qualitative changes in the nature of

provision. According to the 2001 manifesto, ‘where private-sector providers can support

public endeavour, we should use them. A spirit of enterprise should apply as much to

public service as to business’ (Labour Party, 2001: 17). In an effort to improve efficiency,

the private sector was increasingly brought in to the provision of public services through

Public-Private Partnerships (PPPs). These schemes were, in particular, used to finance

capital-intensive programmes such as the Private Finance Initiatives (PFIs) for the

building of new schools and hospitals. Though the long-term financial logic private

sector involvement has sometimes been questioned (e.g. House of Commons Committee

of Public Accounts, 2007), the Labour government’s faith in efficacy of the private sector

(and private sector principles) for the public sector remains strong.

3. Action against poverty: ‘our ten-year goal is to halve child poverty... within two years,

no pensioner need live on less than £100 per week’ (Labour Party, 2001: 24).

Although the main focus of the Third Way is to ensure equality of opportunity, it also

incorporated the idea of eradicating poverty for the most vulnerable members of society.

The social exclusion of young people in particular is seen as a powerful barrier to the

fulfilment of potential. New Labour sees work as the main route out of poverty and

numerous measures have been implemented to improve incentives to take on low-paid

jobs (see below). Under Blair and Brown public money has also been used to deal

directly with the problem of poverty directly, and government structures have been re-

designed to assist with this objective e.g. the creation of the Social Exclusion Unit. The



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eradication of child poverty has been a central goal of the Labour governments. Whilst

their UK governments goal of eliminating child poverty by 2020 seems highly optimistic

and recent studies that show the UK still ranks poorly in this area compared to other

industrialised countries (UNICEF, 2007), child poverty was more than halved in absolute

terms between 1997 and 2005 (DWP, 2007).8 This has been achieved through the growth

in employment (Figure 1), and supported by – for example – by increases in child benefit

and the extension of maternity pay. Similarly, older people have seen a growth in

standard pension rates – a Minimum Income Guarantee alongside other measures such

as the reduction of VAT on fuel and Winter Fuel Payments. Using the same measures,

pensioner poverty decreased by over 75% to 700,000 between 1997 and 2005 (DWP,

2007).

4. Welfare-to-work : ‘The best form of welfare is work’ (Brown, 1999: 52).

Action against poverty has been strongly linked to changes in the benefits and tax system

to make work pay. The creation of a minimum wage and of a system of tax credits e.g.

Child Tax Credit, Working Tax Credit, was designed to remove the poverty trap by

offering a minimum guaranteed ‘take-home pay’ for those willing to accept low-paid

work (Labour Party, 2001: 26-7). The government has focused on improving

employment rates in key target groups such as ‘mothers’. In this instance, policies have

implemented to ensure better childcare provision (e.g. the SURESTART programme)

and broaden the provision of flexible working hours to cater for mothers returning to

work. In addition to the added incentives to accept work, Labour has introduced stiffer

requirements for job seekers – to actively look for work – in order to receive

unemployment benefit (‘jobseekers allowance’). Since the Third Way’s mantra is that any

job is better than none (Blair and Schröder, 1999: 174), the Labour government has been

an active proponent of labour market flexibility. Although basic minimum standards

have been introduced (e.g. the minimum wage, the European Working Time directive),

New Labour had no intention of repealing trade union legislation enacted under the

Conservative governments. The third string to Third Way welfare-to-work policy has

been the commitment to training and guidance for the unemployed through the ‘New

Deal’. The New Deal is a traditional social democratic demand-side programme,

investing in skills and training, initially funded (on Gordon Brown’s insistence) by a

£5billion ‘windfall tax’ on recently privatised utilities.

8 The measurement of child poverty relates to an income below 60% of the median.



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Brown and Cameron � A New Consensus?

Clearly Gordon Brown can be seen as the architect of much of New Labour’s domestic

policy, and the differences between Blairites and Brownites should not be overstressed.

Divisions have stemmed mostly from personal rivalry and Brown’s natural caution over

policy innovations (in contrast to Blairite efforts to implement bold reforms – sometimes

seemingly for their own sake!). Whilst Labour’s policy programme will substantially

remain the same, the new Brown government hopes to focus more attention on

unfulfilled aspects of the Third Way Agenda: greater self-government through the

decentralisation of power and citizen choice. With reference to public services this

involves two key principles – ‘devolution of power to the front-line’ and ‘greater choice’

(Blair, 2002: 17) – that were only sporadically achieved under Blair. For example, top-

performing some hospitals were given Foundation Trust status and General

Practitioners’ surgeries were transformed into semi-autonomous primary care units. But

these gains in decentralisation were negated by the pervasive nature of the multitude of

central government targets and reform objectives. Though Brown’s new agenda claims to

be seek a decentralisation of power, this is quite paradoxical given the Chancellor’s

reputation as the guiding force behind the target culture. Despite the recent decisions to

trim executive power over the legislature (e.g. over taking the country to war), it remains

to be seen whether the Brown government will achieve a coherent and consistent

devolution of powers to local government and front-line services.

Perhaps more interestingly than the agenda of the new Brown government, is the

approach of the Conservatives under David Cameron (leader since December 2005),

who – against the wishes of many in the party – has adopted much of Labour’s Third

Way policy programme.9 Spending on public services is not now seen as incompatible

with a successful economy. In terms of the Third Way, it has been argued that the ‘most

sizeable New Labour achievement is to have changed completely the terms of the debate

about public service investment and reform… [and] about poverty and social exclusion’

(Mandelson, 2002: ixx, xxi). David Cameron and George Osborne have committed the

9 Peter Mandelson recently commented that Blair’s greatest achievement was Cameron, meaning that he (Blair) had shifted the terms of the political debate in the UK.



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Conservative Party to maintaining the current rate of increases in spending on public

services and to no major tax cuts in the medium term. The debate is thus no longer

about how much money should be devoted to public services, but over how that money

should most effectively be spent (Osborne, 2006). The Conservative leadership has, for

example, argued that Blair’s ideas on ‘choice’ were right, but that he was wrong ‘to

impose them from Whitehall’ (BBC, 2007).10 In fact, during the Labour Party deputy

leadership election in 2007, the Conservative Party made an explicit attempt to tar Brown

and the deputy leadership contenders with the Old Left brush, maintaining that they

would be the ones to see through the Blair reforms. Given the reality of the (actually)

quite small differences between Brown and Blair, this amounts to the development of a

consensus in the UK on the role of the state and public services (even if minor

differences exist over methods of delivery).

A Progressive Consensus in Europe?

Equally interesting is the growing prominence of Third Way-type agendas in European

social democracy. Though it would be wrong to attribute these changes to direct policy

transfer from Labour (or from the US Democrats), the party’s political success and the

UK’s economic success has certainly made these policies more attractive. The Third Way

agenda is especially appealing for on the European continent given the relatively high

levels of public spending, public debt and unemployment in the other large European

countries (Figure 3, below). European social democratic parties that have come to power

have frequently adopted policy programmes that resemble the British Third Way, even

though their unique set of institutional constraints and national social-economic starting

points (see Figure 3) have often placed them on different trajectories (Paterson and

Sloam, 2006).

Let us take the German Social Democratic Party (SPD) and the French Socialist Party

(PS) as our two examples. The former has been in power since 1998 and the latter was in

government between 1997 and 2002.11 Schröder was initially a key figure in the

10 Furthermore, the Conservative Party’s most recent policy reviews have been tilted towards policy areas like ‘social justice’ and ‘public services’. 11 It is important that we compare parties in government given the changes in policy-strategic concerns along the opposition-government paradigm (Paterson, 1981).



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international modern social democratic/ Third Way network that met for its founding

meetings in 1999. The Blair-Schröder paper (1999) was published at a time when the

‘Neue Mitte’ (New Centre) of Gerhard Schröder (the German Chancellor, 1998-2005)

was in the ascendancy in the SPD (Hombach, 2000). The paper, crafted by Peter

Mandelson (Blair’s right-hand man and a founding father of New Labour) and Bodo

Hombach (Schröder’s right-hand man, who helped devise the Neue Mitte concept), whilst

fairly uncontroversial in the Labour Party precipitated a summer of internal turmoil in

the SPD (Sloam, 2004). SPD politicians balked at the apparent cap placed on social

policy (by the argument that public spending as a proportion of nation income could not

increase) and the business-oriented commitment to labour market flexibility. At this time,

the Neue Mitte agenda was defeated in the SPD – institutional constraints and prevented

the imposition of a new approach – and it appeared that the party would take a different

policy path to Labour in the UK. Yet the defeat of the Neue Mitte only proved to be a

hiatus, as many of the ideas initially put forward in 1999 were implemented as part of the

SPD-led government’s ‘Agenda 2010’ reform programme from 2003 to 2005. Agenda

2010 represented a serious effort to rein in public finances (e.g. freezing pension rates)

and introduce welfare-to-work employment policies (i.e. the so-called ‘Hartz reforms’)

(see Streeck and Trampusch, 2005). In the face of the resource crunch in German public

finances (see Figure 3) and the (perceived) constraints of economic globalisation,

Schröder warned that Germany (and his own party) must ‘modernise or die’ (The

Guardian, 2003).12

The political costs of these reforms were nevertheless very high for the SPD. The

introduction of penalties for those not accepting jobs, through the notorious Hartz

reforms, was largely responsible for the haemorrhaging of support amongst the party’s

traditional constituency. It also indirectly assisted the emergence of a new (hostile)

electoral coalition on the hard left of the spectrum (‘Die Linke’). In 2005, the party was,

thus, keen to reassure its supporters that it would ‘preserve the welfare state’ (whose

‘main role remains that of social levelling’) (SPD, 2005: 9). Despite the political costs, the

SPD programme demonstrated clear convergence with the Labour Third Way (Paterson

and Sloam, 2006) – from the commitment to place ‘equality of opportunity’ at the heart

of its ‘Politics of the Centre’ (SPD, 2002: 10), to support for an ‘active state… that helps

people to lead an independent life’ (SPD, 2005: 9), to the central argument that

12 For a good discussion of the instrumentalisation of the term ‘globalisation’ by Third Way social



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‘economic prosperity and social justice are not contradictions’ (SPD, 2005: 8). Though, as

junior partner in the current (Christian Democrat-Social Democrat) ‘Grand Coalition’,

has been nervous about advertising its policies as revisionist (given the increased

competition on the left of the political spectrum), the adoption of Third Way-type policy

platform is likely to be confirmed in the SPD’s new Basic Programme (SPD, 2007)

The French Socialist Party has a (deserved) reputation as a more left-wing party. The PS-

led government under Prime Minister Lionel Jospin (1997-2002), though implementing

some more leftist policies (e.g. the ‘35-hour-week’) nevertheless also sought to cap public

spending and deregulate some areas of the labour market and the economy. In fact,

Jospin’s formulation of ‘réalisme de gauche’ (leftist realism) (Clift, 2001) indicated that

the party was at least trying (despite its socialist rhetoric) to adapt to the realities of the

modern world. Jospin’s 2002 Presidential manifesto sought to balance it emphasis on

‘inequalities in income’ with ‘equality of opportunity’: ending poverty with special regard

to housing whilst promoting social investment through (particularly) education (Jospin,

2002: 3, 15-7, 25). Tellingly, the PS-led government managed to increase social

investment through a ‘leftist savings policy’ (Merkel, 2000) that channelled more

resources to social democratic priority areas without adding to overall levels of public

spending. Therefore, the PS in government also converged towards a Third Way-type

approach – even if it maintained a more ‘dirigiste’ (statist) belief in the role of the state.

In other ways, the Parti Socialiste continued to proclaim a more traditional social

democratic outlook – for instance, viewing the benefits system only in terms of citizens’

rights and the state’s responsibilities. The general approach was characterised by Jospin’s

dictum ‘Yes to the market economy, no to the market society’ (PS, 1999). This balanced

modern social democratic agenda was not, however, sustainable outside government

given the natural ‘federating tendencies’ (Knapp and Wright, 2001) of the PS (with

factions rallied around potential presidential candidates), the extreme competition on the

left of the political spectrum (greatening the demand for socialist rhetoric) and the nature

of the France’s two-round electoral system (increasing the need to appeal to core voters

before the first round of voting). Jospin was, thus, suffered a humiliating defeat in the

first round of the 2002 French presidential elections for promoting a programme that

was seen as too centrist. Conversely, Ségolène Royal (in her bid for the 2007 presidency)

democrats, see Watson and Hay (2003).



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found her popularity sink amongst the public at large when she was forced to unite the

party’s diverse factions around a more traditional leftist programme (Royal, 2007).

In the context of larger more regulated welfare states, the SPD and PS in government

have – contrary to the Labour Party – been encouraged to bring in liberal economic

reforms without the capacity to increase overall public spending. European integration

has also played an important part here – the completion of the Single Market and the

stability-based ethos of the European Central Bank have further constrained government

policy. The impact of globalisation is less tangible, but the (perceived) threat of tax

competition and ‘outsourcing’ has also affected the social democratic mindset. From the

perspective of the post-Thatcherite UK, the Labour Party has been able to pursue a

more traditionally social democratic agenda (i.e. increased spending in public services).

Blair (2002: 16) boasted that ‘Britain is the only European country where public spending

as a proportion of national income in education and health will rise this year and next’,

but recognised that – from a lower starting point – the UK was actually trying to close

‘the gap with average European levels of funding’. These social democratic parties –

moving along different trajectories - have thus converged towards similar political-

economic-social models. Though this might at first seem counter-intuitive – for tactical

reasons, Labour has spun its policies to the right whilst the SPD and PS have spun to the

left13 - the real story has been the development of a new social democratic consensus in

Europe. The major problem for the SPD and the PS has been the political cost of new

programmes. Agenda 2010 resulted in the emergence of a new electoral threat on the left

in Germany, whilst Jospin’s denial that his programme was ‘socialist’ contributed to the

PS’ electoral disaster in 2002. Labour, on the other hand, has proved more effective in

packaging its new policy programme into a politically acceptable formula.

Conclusion: a new narrative?

This paper argues for a new narrative for the analysis of the Labour Party and the Third

Way policy programme pursued under Tony Blair and Gordon Brown. The three main

strands of this new narrative are that:

1) Labour’s Third Way has represented a (more or less) coherent political

programme (in both strategic and policy terms).

13 The gap between rhetoric and policy (especially in government) has been particularly marked in the PS as a consequence of the fragmentation of the Left in France e.g. the number of leftist challengers for the Presidency in 2002 and 2007.



15

2) This policy programme has substantively shifted the centre of gravity of

the political debate in the UK.

3) The Third Way has had significant resonance in the development of

European social democracy.

The development of this new narrative should enable a more convincing explanation of

where the Labour Party has succeeded and failed to meet its policy objectives, and the

future development of the European centre-left.



16

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Figure 1 (source: OECD, 2007; HM Treasury, 2007)

UK Economic Performance under Blair-Brown

0

20

40

60

80

100

120

140

1997 2001 2005

Year

Performance (1997 as 100)

GDP

Unemployment

Public Debt (% of GDP)

Public Spending (in real terms)



20

Figure 2 (source: HM Treasury, 2007)

Public Spending under Major and Blair (1990-2007)

0

50

100

150

200

250

1990

-1 (C

ons - M

ajor

)

1991

-9

1992

-3

1993

-4

1994

-5

1995

-6

1996

-7

1997

-8 (L

ab -

Blair)

1998

-919

99-2

000

2000

-1

2001

-2

2002

-3

2003

-4

2004

-5

2005

-6

2006

-7 (E

nd of L

ab -

Blair)

Year

Spending Increase (in real terms where 1990-1 is 100)

Transport

Health

Education

Overall Public Spending



21

Figure 3 (Source: OECD, 2007)

Economic Performance of Large EU States: 1997, 2004

41.6

53.7

48.3 50.253

68.4

60.4

129.7

6.811.5

9.211.2

43.8

53.3

47.3 47.843.7

73.368.8

117.5

4.79.6 9.5 8

0

20

40

60

80

100

120

140

UK France Germany Italy UK France Germany Italy UK France Germany Italy

Public Spending (% of GDP) Public Debt (% of GDP) Unemployment (% of workforce)

Documents

‘Blair, the Third Way and European Social Democracy: a …casey1/BAB-Sloam.pdf · ‘Blair, the Third Way and European Social Democracy: a new political consensus? Introduction